ByteDance's TikTok is reportedly setting an ambitious goal to grow the size of its US e-commerce business, aiming to reach up to $17.5 billion in 2024, according to sources familiar with the matter reported by SCMP.
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This illustration photograph taken on October 30, 2023, shows the logo of TikTok, a short-form video hosting service owned by ByteDance, on a smartphone in Mulhouse, eastern France.
The internal discussions around this target for TikTok Shop in the US have taken place in recent weeks, and while the goal may still be subject to change based on business performance, it could underscore TikTok's intentions to expand its presence in the competitive e-commerce landscape.
This move places TikTok in direct competition with major players like Amazon and Chinese-owned retail brands Temu and Shein, both of which have made huge splashes in attracting younger American consumers.
TikTok's Foray into the E-Commerce Space
TikTok's reported target clashes with Amazon's dominance in the e-commerce space, signaling the platform's intent to carve out a significant market share in the US.
The company had a remarkable year in 2023, with global gross merchandise value reaching approximately $20 billion, primarily driven by strong sales in Southeast Asia.
Now, TikTok is reportedly eyeing expansion in the US and Latin America, with plans to launch its e-commerce operations in the latter region in the coming months.
TikTok Shop, a rapidly growing feature for ByteDance, the Beijing-based parent company of TikTok, operates within the main social media app. It allows users to make purchases seamlessly while scrolling through short videos and live streams.
This feature aims to provide a blend of Amazon's shopping convenience with the product discovery experience seen on platforms like Meta's Instagram.
Outperforming Meta and Tencent
ByteDance's success with TikTok and Douyin in China has catapulted the company into the ranks of internet leaders, boasting a valuation of over $200 billion. As the social media advertising market evolves, ByteDance seeks new growth drivers, and TikTok Shop emerges as a key component in this strategy.
In 2023, ByteDance's revenue soared by approximately 30% to surpass $110 billion, outperforming growth projections of heavy players like Meta Platforms and Tencent Holdings, according to SCMP.
TikTok's global push in e-commerce involves offering free shipping and subsidies to influencers in the US who showcase products in videos and live streams. The platform's user base in the US is around 150 million, and the company reported that over 5 million new customers made purchases on TikTok in November 2023, driven by holiday season deals.
In an effort to generate revenue from its e-commerce platform, TikTok recently announced a fee increase for merchants, with commissions set to rise to 6% of each sale in April and 8% in July for most product categories.
With the increasing comfort of Americans in using Chinese e-commerce apps for shopping, TikTok aims to leverage this trend and establish itself as a significant contender in the dynamic global e-commerce arena.
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